Laws, Regulations, and Guidelines, Including Prohibition on Unethical Business Practices
The statutory map
The Securities Act of 1933 governs new issues: registration, the prospectus, and the ban on sales before the registration is effective. The Securities Exchange Act of 1934 governs secondary markets: broker-dealer and agent registration, reporting companies, proxy and tender offer rules, and insider trading under Rule 10b-5. The Investment Company Act of 1940 governs funds; the Investment Advisers Act of 1940 governs advisers. The Uniform Securities Act supplies the state registration and enforcement layer.
Who registers where
Advisers with $100 million or more in assets under management (with a buffer to $110 million) register federally; under $25 million they register with the state; in between, the state applies unless a notice filing is made. Federal covered advisers never register in a state but do notice file. Agents and investment adviser representatives register in each state where they have a place of business or a client, and consent to service of process. Form ADV has Part 1, Part 2A (the brochure), and Part 2B (the supplement), delivered 48 hours before the contract or at signing with a five-day cancellation right.
Prohibited practices
Churning and excessive trading, unauthorized transactions, front running, scalping, market manipulation, misrepresentation, selling away, commingling, borrowing from clients absent narrow exceptions, and guaranteeing a client against loss. Performance-based fees require a qualified client and full disclosure.
Traps
Exempt securities (US government, municipal, bank, insurance company, nonprofit) versus exempt transactions (private placements, unsolicited brokerage, fiduciary, underwriter) is the single most tested distinction. A guarantee against loss is always a violation. Custody triggers surprise audits and client notice.
Worked example
An adviser with $28 million in AUM and one office is state-registered; opening a second state with clients requires registration there as well, but a federal covered adviser's second-state presence is only a notice filing.